Maya Fisher French

Crooked debt collectors and attorneys are pulling in close to R1-billion a year by overcharging often financially illiterate borrowers, estimates a company that helps employers rehabilitate debt-trapped employees. And there are fears that corruption in the debt-collection system will undermine the good intentions of the National Credit Act, which kicks in on June 1 this year.

Criminals are becoming more sophisticated each day as international syndicates team up with local criminals to obtain personal information from unsuspecting people and use this to access your bank accounts and even access credit in your name.

Employed South Africans will pay a percentage of their monthly earnings into a new mandatory social security scheme. It is proposed that total payments will be capped at R750 a month, with lower-income workers paying between 13% and 18% of their monthly earnings into this fund.

Several tax announcements in the budget will have an impact on investments. Many companies will be celebrating the phased removal of secondary tax on companies that will, over the next two years, be converted to a dividend tax in the hands of the shareholder.

Despite collecting R29-billion more in taxes than expected, Finance Minister Trevor Manuel was not as generous to taxpayers as he has been in the past. The R8,4-billion of personal and R12,4-billion in total tax relief has only offset inflation and partially offset the effects of changes last year to the taxation of medical aids and car allowances.

Between corporate South Africa and the government there is about R700-billion of cash sitting in the bank. Corporate South Africa has steadily increased its cash holding from about 12% of GDP in 1994 to a massive 38% of GDP in 2006. This equates to more than R600-billion.

The market pundits are again debating whether there will be another interest-rate hike next month. After a practically unanimous view last year that a further rate hike was likely to follow December’s 50-basis points increase, new data, combined with a lower oil price and a reasonably strong rand, has some economists reviewing their positions.

While all eyes are on the banking industry’s credit expansion, the mass market faces a far greater threat from credit extension by furniture retailers. According to LifePower, a company that provides financial literacy education to workers, furniture retailers that provide credit, including big brand names such as Joshua Doore and Ellerines, are largely responsible for the debt traps consumers find themselves in.

Number portability is finally here. That means that, if you want to keep the cellphone number, you have had for 10 years, you no longer have to stick with the cellphone provider you first signed up with. The first three digits of a cellphone number will no longer relate to the cellular provider and consumers can shop around for the best packages without notifying their entire contact list about a change.

From the beginning of December, the life industry’s statement of intent, which sets the new minimums in terms of surrender values, comes into force. This has major implications for people who have made changes to their retirement annuities, endowment or whole life policies since January 2001.

FNB offers by far the most cost effective way for consumers to draw cash and is leaving other banks behind in a drive to deliver affordable cash options to the mass market. By drawing money from certain retail outfits, FNB customers can draw cash for a flat fee of R1,75, slashing ATM costs by two-thirds.

Michael Jordaan, CEO of First National Bank, was in an upbeat mood when we met for lunch. The latest GDP figures had just been released and bode well for the economy. They also proved that the bank’s position on the economy was correct and that it had not been overly optimistic in its business plans.

Justice at last for policyholders! From Friday December 1 life companies will start adjusting the value of all retirement annuity funds and endowment policies where premiums are cancelled or reduced, to ensure that investors get a fair return on their money. In line with an agreement between the life industry and national treasury in December last year, the new order will cost life assurers about R3-billion.

Cellphones are taking over our lives and therefore it should naturally follow that we use the devices to insure our lives. As long as you have your cellphone with you, you can take photographs and videos and send them to people. You can pay your bills and check your bank balance. The latest technology allows us to watch 16 TV channels on our phones.

As bank customers we are able to shop around for the best banking package, and the banks have been fairly aggressive in offering cheaper banking options. However, there is an additional fee over which we have no control. It provides a large but conveniently indeterminate revenue fee for the banks and faces no competition.

Banking fees are a disincentive to save, according to Gabriel Davel (below) of the National Credit Regulator. In his submission during the public hearings held by the Banking Commission recently, he demonstrated that it actually costs people to save money in a bank account and that it could actually be cheaper for people to access credit rather than to save.

Imagine a banking product that has no monthly account fee, carries no charges when you make purchases, offers 55 days’ interest-free credit, rewards you for using the product by giving you discounts or loyalty points, and then throws in free travel insurance. Not only does it exist, but the banks are so keen for you to have this product they are offering to approve your account in seconds and give you additional interest-free periods.

South Africa is one of the few countries in the world where mortgage bonds are linked to short-term interest rates. As a result South African homeowners experience high volatility when it comes to mortgage repayments. Considering that mortgage payments are the biggest expense for homeowners, it would make sense to find a mechanism that can decrease the volatility of bond repayments, something Reserve Bank Governor Tito Mboweni alluded to recently.